Investor's Guide to Enormous Oil & Gas Dividends
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Transcript of Investor's Guide to Enormous Oil & Gas Dividends
An Investor’s Guide to Oil & Gas MLPs (Part II)
Photo credit: Flickr/haymarketrebel
Part II Will Look at Five Growing MLPs
• Represent ~25% of segment’s value
• Less geographic diversity• Higher yields
Legacy Reserves LP
• $1.5 billion market cap
• 9.0% yield• Coverage ratio last
quarter: 1.3x• Distribution paid
quarterly
Ticker: LGCY
Photo credit: Flickr/Edward Stojakovic
Asset Map
Source: Legacy Investor Presentation
The Information that Matters
• Total Proved Reserves: 88.4 million BOE• Liquids production: 69%• Reserve to production index: ~12 years• General Partner: None• Areas to watch: Permian Basin development
QR Energy LP
• $1.2 billion• 11% yield• Distribution
coverage ratio last quarter: 1.1x
• Distribution paid monthly
Ticker: QRE
Photo credit: Flickr/Ray Bodden
Asset Map
Source: QR Energy Investor Presentation
The Information that Matters
• Total Proved Reserves: 99.1 million BOE• Liquids production: 68%• Reserve life index: ~16 years• General Partner: None• Areas to watch: Permian Basin development
and balance sheet
Atlas Resource Partners, L.P.
• $1.3 billion market cap
• 10.3% yield• Distribution coverage
ratio last quarter: 1.1x• Distributions paid
monthly
Ticker: ARP
Photo credit: Flickr/Nicholas A. Tonelli
Asset Map
Source: Atlas Resource Investor Presentation
The Information that Matters
• Total Proved Reserves: 1.4 Tcfe• Liquids production: 10%• Reserve life index: ~13 years• General Partner: Atlas Energy• Areas to watch: Direct investment program,
natural gas prices and shale focused drilling
Eagle Rock Energy Partners, L.P.
• $880.9 million market cap
• 10.9% yield• Distribution coverage
ratio last quarter: 1.05x
• Distribution paid quarterly
Ticker: EROC
Photo credit: Flickr/Kool Cats Photography
Asset Map
Source: Eagle Rock Investor Presentation
The Information that Matters
• Total Proved Reserves: 350 Billion Cfe• Liquids production: 44%• Reserve life index: ~13 years• General Partner: None• Areas to watch: Divestment of midstream
operations and SCOOP growth
Memorial Production Partners LP
• $1.34 billion market cap
• 10% yield• Distribution coverage
ratio last quarter: 0.67x
• Distribution paid quarterly
Ticker: MEMP
Photo credit: Flickr/Loco Steve
Asset Map
Source: Memorial Investor Presentation
The Information that Matters
• Total Proved Reserves: 1,063 Billion Cfe• Liquids production: 31%• Reserve life index: ~18 years• General Partner: Memorial Resource
Development and Natural Gas Partners• Areas to watch: Acquisitions outside of Texas
and distribution coverage ratio
Now Let’s See How Each Compares
• Scale• Reserves• Production • Hedging
Enterprise Value
Total Proved Reserves
Sources: Company presentations, SEC filings and author’s calculations
Where is the Cash Flowing From?
Sources: Company presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?
Sources: Company presentations, SEC filings and author’s calculations
How Secure is the Cash Flow?
Sources: Company presentations, SEC filings and author’s calculations
Key Takeaways• Legacy Reserves – Solid balance sheet, oil rich production
though not as well hedged• QR Energy – Oil rich production with downside risk to
falling oil prices• Atlas Energy – Natural gas rich cash flows locked in for
near term, with long-term upside• Eagle Rock Energy – Balanced production and solid
hedges and lots of upside to the SCOOP• Memorial – Balanced production with locked in cash
flows
Our Special Free Report on nine rock-solid dividend stocks